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SA Express crowdfunding bid put on ice

The airline is set to be recapitalised by a new anchor investor.
The public offering will reopen once the airline resumes operations. Image: Tod Burns

Fly SAX, a worker owned entity, has suspended its bid to raise seed funding to buy cash-strapped regional airline SA Express through crowdfunding platform Uprise.Africa.

Read: Employees save SA Express

The seed funding will instead be raised by an anchor investor who will recapitalise SA Express and take full ownership of the airline to get it off the ground, according to the group’s spokesperson Thabsile Sikakane.

“Crowdfunding is not completely off the table. It’s just that for now in order to recapitalise the business, we needed immediate cash which the [new] anchor investor is more than willing to put up,” says Sikakane.

Sikakane is keeping mum on the name of the new anchor investor but says it is a “reputable South African company”.

The entity was given the green light in October last year to buy the distressed airline.

The numbers

Initially, Fly SAX has estimated that it would require R250 million as start-up capital for the airline, with R200 million to be sourced from the anchor investor and through equity crowdfunding.

That plan has now been put on hold and the anchor investor is in full control of the deal, Sikakane says, adding that the public offering will only reopen once the airline resumes operations.

The remaining R50 million would be payable in the form of a bank guarantee and from the sale of the airline’s assets. So far, the sale of the airline’s assets has raised roughly R24 million, leaving an outstanding balance of R26 million.

The outstanding balance is expected to be provided by the new investor. The amount needed to recapitalise the beleaguered airline is still unknown, according to Sikakane.

Read: SA Express could go into final liquidation if balance of purchase price not secured

SA Express has been under provisional liquidation since April last year. The airline’s rescue practitioners were granted a four-month extension by the Johannesburg High Court last month to allow for the conclusion of talks related to the shareholder agreement to avoid final liquidation.

Debt

The airline is drowning in debt, owing R980 million to its creditors, R150 million to the SA Revenue Service and R183 million to workers who have not been paid since February last year.

Sikakane says the new anchor investor will not be taking on this debt.

Moneyweb has previously reported that Fly SAX had secured two investors – Abu Dhabi-based Imperial Capital and the Landile Shembe Foundation, which were initially brought in to help the airline restart its operations. Sikakane says the two investors remain but will only be brought in once the airline has been recapitalised by the unnamed anchor investor.

Read: SA Express workers secure two anchor investors

The next step will be to secure the approval of the airline’s creditors and sign a share sale agreement with the Department of Public Enterprises. This process would enable Fly SAX to meet the requirements of capital adequacy, according to Uprise.Africa CEO Tabassum Qadir.

According to Fly SAX’s bid proposal, investors from the crowdfunding platform will not directly own shares in Fly SAX as it is a privately owned company and is not permitted to offer shares to the public.

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One wonders who the ‘public’ is who will be interested in SA Express? The type of person that have money to invest is too well informed to touch SA Express or SAA, or any airline in this day and age.

I’m surprised we haven’t seem Motsepe Aviation put in a bid. Funded by the PIC and taking a few million for “management fees”. What could possibly go wrong?

I don’t think that people will be flying as much as they use to due to both the uncertainty of how the government decides to intervene when with lockdowns and the increase in competition of existing airlines.

Someone obviously has a lot of money to flog a dead horse around whilst having the political backing to do so.

SpaceX is only about 3 years away from having a commercial rocket available that is 5 time less expensive to operate and 10 times cheaper than regular commercial airlines. Given that the JNB to CPT is the 12st busiest route in the world. Imagine flying the route in 20min instead of 1 hour 30min, that means that by the time a regular airline transits a single trip, the space x rocket would of easily completed 3 trips including offloading and loading passengers.

https://www.youtube.com/watch?v=0FJhiSdGWsk (bit of an old video)

The anc and eff communist socialist gimme club members don’t invest, they simply take, take and take from the free market taxpayers!

Why invest directly in anything, let alone an airline they all lust after, the “government” must just pay up on behalf of their “our people” and their crazy economic revolution!

Phht.

End of comments.

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